If you already have plenty of money in your savings account consider opening a Roth or traditional IRA.  These retirement accounts will help you save money and possibly reduce your taxable income.  If you strategize appropriately they will help you pay less in taxes once you do retire.  For more information see:

http://www.investopedia.com/articles/retirement/03/012203.asp.

Of course, if you have a significant amount of unsecured debt you MUST create a plan to pay off this type of debt before you even consider saving money, either in a traditional savings account or for retirement.  Unsecured debt (credit cards etc.) will continue to hold you back financially until you pay them off… completely!  If you have debt use your task refund to either pay off your debt completely or create a plan to pay it off within a year.  If you cannot pay off your unsecured debt within two years on your own consider utilizing the services of a reputable Consumer Credit Counseling Service (CCCS) or Debt Settlement company.

Advertising for credit reports and credit monitoring services simply perpetuate this belief that one’s credit score (aka FICO score) is the one and only indication of creditworthiness.  The invention of the credit card (unsecured line of credit) and the FICO score have become the bane of many Americans’ existence.  Hardly a day goes by where I don’t see a TV commercial for free credit reports or free credit reporting services.  Hardly free, these services continue to increase awareness in consumers’ minds that their credit score is the most important financial aspect of their lives.  Wrong!

The single most important aspect of one’s financial position is life is their ability to SAVE money; not spend it.  The next time you get a paycheck don’t think about what you can buy.  Rather, think about how much you can save.  Set worthy financial goals for yourself such as paying cash for your car.  Do NOT finance consumers goods… period.  These days, the only item you should ever need to finance is your home.  This is a relatively reasonable purchase to finance because property values have historically increased, there are tax benefits, and as a result it is considered an asset.  Unless you are business owner, you should not have to finance anything else.

Just spend a moment thinking about how your parent’s and/or grandparent’s generation made it through life.  I guarantee you they did not leverage every penny they earned financing furniture, appliances, tv’s, cars, homes etc.  Next time you have a family get together ask the oldest living member of your family how they managed/manage their finances.

If you are struggling to make your monthly payments to your creditors it’s time to take a hard look at your budget.  Take a few moments to prepare a simple budget analysis to determine if you have sufficient cash flow to make ends meet.  If you’re running negative then it may be time to arrange for a free consultation with a qualified bankruptcy attorney.  However, if you have a little income left over to work with then bankruptcy could be avoided.  For more information on budgeting see: “Can You Afford A Debt Settlement Program”.

Qualifying for bankruptcy can be tough.  There are several means tests that a qualified bankruptcy attorney will perform in order to determine if you should file either Chapter 7 or Chapter 13 bankruptcy.  If you actually qualify for bankruptcy you are in essence rescinding most of your control over your finances.  Additionally, the cost of filing usually starts at about $1,500 and goes up from there depending on the complexity of your circumstances.  See http://www.provanta.com/bankruptcy/.

Take a moment to determine if you really are Living Beyond Your Means.  If you make some time now to examine your financial circumstances you may be able to avoid impending financial ruin.  Don’t wait until it’s too late to to take a hard look at your finances.  It may be painful but once you do you will be that much closer to experiencing financial freedom.  You may have several options from CCCS (consumer credit counseling services), to debt settlement, to bankruptcy.  However, if you wait too long you may ultimately limit yourself to the last and most painful option of bankruptcy.

Provanta is not a law firm and none of our employees or contractors are attorneys.  However, if you are interested in determining if you qualify for our debt settlement program please feel free to contact us for a consultation.

The advertising on TV and radio for “free” credit reports often comes at a price.  They often give you your credit report in exchange for signing you up for a monthly credit monitoring service that you have to pay for.  Not free in the least bit.  Several years ago the Government supported the creation of a site where you can obtain all three of your credit reports (Equifax, Experian, and Transunion) for FREE once a year: www.annualcreditreport.com.  Or, you can call the toll free number to order your reports by mail: 1-877-322-8228.

More important than actually finding the right place to get your credit report is actually determining whether or not you need to in the first place.  The lending industry would love for all American consumers to believe that their financial livelihood hinges solely on knowing what’s on their credit report and what their credit score is.  Constant advertising for services providing this information doesn’t help.  In reality, most lenders are more concerned with your debt-to-income ratio than your actual credit/FICO score.  (FICO is the credit score used by most lenders and is generated by the Fair Isaac company.  See www.myfico.com for more information on how your credit score is actually calculated).

If you have a large amount of revolving unsecured debt (primarily credit cards and personal loans) then you have a problem that far outweighs concern for your credit score.  Your credit score will most likely continue to decline as the years pass even if you are making your minimum payments every month.  The only way to see your credit score improve in this situation is to pay off your debt as fast as you can.  To find out how fast it will take you to pay off your debt use this calculator: http://www.bankrate.com/brm/calc/creditcardpay.asp.  If you find that it will take more than 3 years to pay off your debt find help NOW!  Don’t wait around thinking that you can pay off your debt on your own.

Even if you have obtained lower interest rates from your creditors or managed to get them to accept lower payments it is only a short-term solution.  These types of arrangements typically only last 3 – 12 months and then you’re back in the same boat.

For unsecured accounts such as credit cards the terms of the loans are quite arbitrary.  Your creditor can increase your payment or your interest at just about any point in time.  If they believe that you pose a greater risk and if your creditworthiness decreases they may begin to limit your available credit and increase your APR.  You might have low interest now but ask yourself how long you think that’s going to last.

With so many banks going out of business, merging, or being acquired by other banks, the terms of  your original credit card contract may become void.  Any time your creditor changes you will receive a new contract with potentially very different terms than your previous one.

Don’t get hung up on this notion that your credit score is all important.  If you have a large amount of unsecured debt getting out of debt is far more important.  Focus on this and before you know it you’ll be in a position where you can rebuild financially.

Our client’s original estimated program term was 29 months.  However, he continued to struggle with his income and expenses after enrollment.  Six of his regularly scheduled monthly deposits were returned as non-sufficient funds (NSF) by his bank.  He has also made special requests to skip or reduce his deposits on 3 other occasions.

We take these types of problems very seriously.  If a client continues to demonstrate an inability to make his monthly deposits as scheduled, we may consider closing the client’s debt settlement program.  This is not to be inconsiderate or unsympathetic to our client’s on going financial problems but to encourage them to look for different options that may suit them better.  Our debt settlement program simply cannot be effective if the client cannot afford it.

We never had to consider closing this particular client’s program despite some of his financial problems.  He was always in communication with us immediately whenever there was a issue.  He made efforts to make up the NSFs or skipped deposits.  He was honest about his situation and he understood why this was a serious matter.  He made all efforts necessary to continue with the program and we stayed committed to help him and to make necessary adjustments to our settlement strategy to accommodate his situation.

In the end, his program term extended only 4 months longer than originally anticipated and we were able to settle his accounts for 41% of the total balance owed.

Ref. 1539

Las Vegas has continued to be one of the hardest hit cities with an annual decline of 29.9%.  All city/metro indices show an annual decline ranging from 29.9% in Las Vegas to 1.8% in Charlotte.

David M. Blitzer, the Chairman of the Index Committe at Standard & Poor’s indicated that there was no evidence of a bottom to the current decline.

For the complete report visit Standard & Poor’s website or click here.

My personal take on the current situation is that it will be a solid two years before we see any sign of recovery in the housing market.  Financial and housing sector woes have create ripples throughout our entire economy that are now just starting to reach other sectors.  Retail and manufacturing businesses are already beginning to feel the effect of reduced consumer spending.  Prices will go up and jobs will continue to be lost.  

Let’s take some cues from our grandparents.  Maybe it’s time for a heart-to-heart talk on how they weathered the storm during the great depression.  While I do NOT believe we are entering another depression I believe we all have equal responsibility to put our individual financial houses in order.  Now is the time to save, ensure job stability, work harder, and focus on paying off debt.  It would be ludicrous and irresponsible to believe that the legislature alone can remedy the current financial crisis.

What does Christmas, the financial sector, and the economy have to do with each other?  Well, as you may or may not know most retailers go “in the black” during the holiday shopping season.  In other words the sales/revenue generated during the holiday season typically predicates whether or not they turn a profit for their fiscal year.  What this means is that they are absolutely dependent on American consumers having disposable income to spend on gifts and the like during the holiday rush.  If Americans don’t spend as they ordinarily would then retailers may suffer, may actually end the year “in the red”, and may not be able to sustain growth during the next fiscal year.  Some may even go out of business.

To this end I am encouraging everyone to start preparing now.  Buy your Christmas gifts a little earlier this year.  Look for sales.  More importantly create a budget for October, November, and December.  Don’t wait until the last minute to load up your credit cards with gifts on December 24th.

The most significant and important gift one can give themselves or their family is a balanced budget.  I realize this is not a very exciting topic but if you work toward this end now then you may actually have a worry free holiday season.  If you currently carry a large amount of revolving unsecured debt on credit cards and personal loans now is absolutely the time to strategize as to how you are going to pay off the debt.  Don’t wait until the new year!  If you cannot balance your budget and cannot pay off your unsecured debt within three to four years on your own then it is time to reach out and look for some professional help.  Investigate your options.  Find a reputable company with a proven track record of success to help you plan on how to eliminate your debt.

Give yourself and your family the ultimate gift this year – financial freedom.

1. Your Credit Score is Below 600
2. You are Saving Less than 5%
3. Your Credit Card Balances are Rising
4. More than 28% of Income Goes To Your House
5. Your Bills are Spiraling Out of Control

What struck me more than any of the other statistics quoted in the article was that the personal savings rate has severely deteriorated over the past couple years.  The following chart was provided based on data from the U.S. Bureau of Economic Analysis.

For the full article provided by Investopedia on Yahoo! Finance click here.

There are many theories and possible explanations that all have some truth behind them.  One possibility is that most people have simply forgotten the basics of sound financial planning.  Traditional financial planners will tell you that you need to have a reserve emergency fund with enough cash to last you at least six months should something unexpected occur, such as job loss.  If your emergency lasts longer than six months then maybe, just maybe, you will use the little piece of plastic to buy food or pay for utilities-just the absolute bare necessities.  Once you are back on track you do all that you can to rebuild that emergency fund, pay off that credit card, and then put the credit card away so that it will be used only in the next dire emergency.  Yes, this may mean some months of clipping coupons and postponing that vacation, but that is what being financially responsible is all about.   

That was then; this is now.  Credit cards are no longer used just for emergencies.  They are used every day to pay for everything from utility bills and groceries to shoes and vacations.  So how did this happen?  Well, first there’s the convenience factor.  Carrying a credit card is definitely easier than carrying a wad of cash in your wallet.  It makes your purse a little lighter and if your purse gets stolen, you can cancel your credit cards. Cash, on the other hand, cannot be canceled and issued to you again.  Convenience is great.

Second, once you get accustomed to using credit cards to purchase daily needs, the line of demarcation between necessity and want blurs.  For example, food is a necessity.  A $100 per person dinner at the new trendy restaurant is a want.  A credit card can marry the two, such that you can satisfy your basic need and your desire at the same time.  Since credit card use has become a habit, the $100 dinners continue and then voila, and 3 years later you’re still paying for that dinner.  This is great…well, not really.

Does this mean that I believe everyone in debt is in their situation because of poor money management, distaste for cash, and lack of self discipline?  No, of course not.  As I mentioned above, there is not one single answer to explain all of this; rather, there are many factors fueling America’s growing debt problem, including the job market, legislation and credit card companies themselves.   However, I think that if Americans are to start trying to resolve this problem, and more importantly, teach our kids how to avoid putting themselves in this same situation, we all need to go back to the basics of sound financial planning and responsible credit card use as soon as possible.